Buying ERP Software: Local Dealer or Direct?

Buying ERP Software: Local Dealer or Direct?

Some ERP (or accounting) software companies only sell their ERP/accounting system through a dealer network. Some only sell direct. Some are a hybrid and do both. There are advantages and disadvantages to all of these scenarios.

Selling Through a Dealer Network

Advantages:

Theoretically, a local ERP (or accounting) software dealer can be on-site faster, more frequently, and less expensively than a company that sells directly.

Sometimes a local dealer represents more than one package. In this scenario, an honest dealer might help you choose the “best” package out of the ones they represent. Keep in mind that this advice can be intentionally or unintentionally clouded. The dealer has different profit margins with different products. The dealer is also going to know some products better than others and a dealer/consultant is always more likely to recommend the product they know better and have worked with the most.

Some ERP (or accounting) software dealers also provide network and workstation configuration services. So you may be able to use one vendor for both your software and hardware configuration services.

Disadvantages:

No matter how many years a local dealer has worked with the system you are acquiring, they are never going to know the system’s capabilities (and limitations) as well as the developer.

An ERP (or accounting) software dealer has a margin that they have to work within. They have to pay the developer a certain amount for your license. They then make money by selling the license for more than they have to pay. By definition, there is less pricing flexibility in this arrangement than a developer who sells direct.

A local ERP (or accounting) software dealer is more likely to go out-of-business than a developer, thereby leaving you somewhat stranded for future support.

Many times, developers who sell through a dealer network do not offer direct support to the client. This forces you to go find another dealer if your current one is unresponsive.

Commonly, local ERP (or accounting) software dealers have limited personnel, which means getting timely on-site or phone support can be a problem. Since getting timely on-site support is the primary advantage of a dealer, it’s really a problem if you have to schedule a day for your dealer to come out to provide support because they are busy and have limited staff.

Developers Selling Direct
Advantages:

The person demonstrating the software to you is more likely to know the current version of the ERP (or accounting) software system inside out. They will likely have a better idea where the system is going in the future and what its limitations are. They are also more likely to be aware of recently added features and the ERP (or accounting) software system’s capabilities. Since they likely only represent and work with one package, they tend to be experts in their package.

The incremental cost to the developer to sell you a system is minuscule compared to a dealer. Developers usually have a lot more pricing flexibility.

Developers who sell ERP (or accounting) software direct usually provide exceptional phone support to compensate for the fact that it is harder to be on-site. It’s common for the developer to be able to see your screen during the support call (assuming you give permission).

A developer who sells direct either has out-of-pocket expenses associated with providing on-site demos or is limited to providing web-based demos. If they come on-site to demo to you, they incur the travel time associated with coming to you. During the selling process, this cost is typically all borne by the developer. During the implementation process where on-site implementation assistance is provided, it is typical for the client to pay the out-of-pocket expenses associated with the travel. Same day on-site assistance probably isn’t going to happen (but it is less likely to be needed).

Most ERP (or accounting) software developers don’t provide network and workstation configuration assistance. You will still need a local or in-house capability for these types of services. Or of course, companies like Dell and HP offer these services.

Developers who only provide classroom training make a successful implementation much more difficult.

My company, Carillon, sells our software, Carillon® ERP, direct. We experimented with dealers early on and didn’t like the results. So at Carillon, we assign a support team that includes a developer to every client and clients always have their team’s direct phone numbers. I have no doubt there are great dealers of other products out there. But I also see a lot of scenarios where we can provide superior and timelier support than a local dealer.

There is no clear best answer. You have to decide what is best for you!